Blog: Tax Talk – The Creative Reliefs

Date: January 9, 2019

By Nigel Holmes, Senior Tax Specialist at Catax.

As you will be well aware, R&D tax relief (the SME version) works by creating an additional relief by uplifting certain qualifying costs in a company’s tax computation. The current uplift rate being 130% and the loss credit rate being 14.5%.

However, this method of obtaining additional relief by way of an uplift is not unique to R&D tax relief claims. In this blog, I provide a summary of the similar reliefs, the situation to which they apply, the uplift rate and, where available, some recent HMRC statistics on these reliefs.

As with R&D tax relief, these reliefs are only available to companies.

Remediation of Contaminated Land

This relief, often known by its original name of Land Remediation Relief, provides an additional 50% relief for qualifying costs incurred in seeking to remove contaminants from land and property, such as asbestos or Japanese Knotweed, or to bring long-term derelict land back into use. Qualifying costs include staff costs, materials and subcontractor costs (no 65% rule unlike R&D tax relief).

As with R&D tax relief, loss-making companies can surrender the loss in return for a 16% cash receipt.

There are no HMRC statistics for this relief as far as I am aware.

The Creative Reliefs

This is a collection of various, quite niche, tax reliefs as follows:

High-end Television, Animation and Children’s Television – uplift rate 100%, repayment rate for loss-making companies 16%. Productions must be certified by the Department of Culture, Media & Sport (DCMS) as culturally British in order to qualify for the relief. In 2016-17, 155 claims were made for High-End Television, 70 claims for Animation Relief and 45 for Children’s Television.

Video Games – uplift rate 100%, repayment rate for loss-making companies 16%. Productions must be certified by the Department of Culture, Media & Sport (DCMS) as culturally British in order to qualify for the relief. In 2016-17, 305 claims were made.

Films – uplift rate 100%, repayment rate for loss-making companies 25%. The film must be a British film intended for theatrical release. In 2016-17, 645 claims were made.

Museum and Gallery Exhibitions – uplift rate 80%, repayment rate for loss-making companies 25%; for the production of public exhibitions, i.e. curated public displays of an organised collection of objects or works of scientific, historic, artistic or cultural interest. There is no data available as yet for this relief as it was introduced in 2017.

A claim cannot be made under different reliefs for the same expenditure nor can a claim be made for R&D tax relief for the same expenditure. Where R&D tax relief is available it will usually be the best option given the much greater uplift rate of 130%.

The above represents a very basic summary of all of these reliefs. Each has its own set of rules and whilst there are similarities with each, and also with R&D tax relief, there are many differences too.